Geithner pays lip service to a strong dollar

[pscot]

http://www.bloomberg.com/apps/news?pid=20601109&sid=aNsHa7QfIvGU

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Timothy Geithner, the current Treasury secretary, has tolerated the greenback’s 12 percent slide from its peak this year in March as measured by the Federal Reserve’s trade- weighted Real Major Currencies Dollar Index. While he said as recently as Oct. 3 that “it is very important to the United States that we continue to have a strong dollar,” the last time the U.S. intervened in markets to support its currency was 1995.

The weaker dollar may boost America’s exports as the economy recovers from the deepest recession since the 1930s. The risk is that it may also drive away America’s largest creditors just as the Treasury relies more than ever on foreign investors to buy the bonds financing Barack Obama’s stimulus spending. The dollar’s share of global currency reserves fell in the second quarter to 62.8 percent, the lowest level in at least a decade, the International Monetary Fund in Washington said on Sept. 30.

“Since the dollar has been weak and weakening for years, Geithner was using a code phrase, a carry-over from the Bush administration,” said David Malpass, president of research firm Encima Global in New York. “It means that the U.S. approves of a constantly weakening dollar but doesn’t want a disruptive collapse,” said Malpass, the former chief economist at Bear Stearns Cos. and deputy assistant Treasury secretary from 1986 to 1989.

Poorer Americans

The dollar’s 15 percent decline against the euro and 11 percent depreciation versus the yen since early March are increasing concern among world leaders. At the same time, Americans are getting poorer.
Per capita net wealth tumbled to $172,749 in August from a peak of $212,599 in September 2007, government figures show. A United Nations Human Development Report released Oct. 5 showed America’s quality of life dropped to No. 13 in a 2007 global ranking from No. 5 in 2000.

European Central Bank President Jean-Claude Trichet said today in Venice that a strong dollar is “important,” repeating remarks made in Brussels on Sept. 28. Toyoo Gyohten, an adviser to Japan’s new finance minister, said the same day there is “no better alternative to the dollar.” Bank Rossii First Deputy Chairman Alexei Ulyukayev said Sept. 29 that Russia will keep buying Treasuries because there’s no realistic alternative.

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[Craftsman]

1. If the dollar stops being the reserve currency we are all screwed.

Efforts need to be made to protect the dollar and not just talk about it.

[Democrats_win]

2. Exchange rate today: $1.47 per Euro, July 2008: $1.57, Dec. 2000: $0.98

Memorize these numbers, there will be a quiz.

Source:
http://www.x-rates.com/d/USD/EUR/hist2000.html

http://www.x-rates.com/d/USD/EUR/hist2008.html

http://www.x-rates.com/d/USD/EUR/hist2009.html

[Art_from_Ark]

5. The Japanese yen is also quite high

Less than 89 yen are needed to buy a dollar now (bank-to-bank), versus more than 100 yen per dollar just last April.

[Why Syzygy]

3. Another screw by Bush

I am so ashamed of our country. We should not live as a poor debtor nation. We have inherent wealth in people and resources. It is mismanaged and stolen by TPTB. Shame on them!

[pa28]

4. Weak dollars = tailwind for the economy seems like it's conventional wisdom now.

Malpass wrote a piece yesterday that takes the opposite side "The Weak-Dollar Threat to Prosperity"

http://online.wsj.com/article/SB20001424052748703298004574458923186941870.html

Not a popular argument but that's about as well as I've seen it made. Worth reading.